You’ve probably heard the term “money mindset” used online. Whether it be from finance social media pages, or financial bloggers.
But what is a “money mindset”? Why does it matter, and how does it affect us?
More importantly, do we have influence over our own money mindset? If so, how do we change it?
I’ll attempt to answer all of these questions in this post. In fact, I’m going to show you how you can change your money mindset in five simple steps.
What Is a Money Mindset?
Your “money mindset” is your unique set of beliefs and attitudes towards money. These beliefs and values drive the decisions you make when it comes to saving, spending and generally handling your personal finances.
Your money mindset determines the feelings you experience when thinking about money or debt. It can also dictate your attitude towards those who make more (or less) money than you do. In other words, it shapes many of your internal prejudices around money. Finally, your money mindset may affect your ability – or willingness – to give money away, or to invest it (i.e., it’s no longer accessible to you) with any confidence.
In many cases, a negative money mindset can turn repeated, self-destructive actions with money to become a habit; a subconscious act that is difficult to break. But, conversely, this means also that a positive money mindset can encourage good habits to be formed!
To change those habits, you must first change your mindset.
How Is Your Money Mindset Formed?
It’s important to understand how your money mindset has been formed over the years. With this information, you can understand where your feelings and attitudes towards your finances came from, allowing you to take actionable change.
Your money mindset can be shaped in many different ways throughout your life. But here are a few common situations that can have an impact:
- Whether or not your parents talked about money, how they handled their money and how you were exposed to that.
- If you’ve been on the receiving end of high levels of generosity.
- Whether or not you held a part-time job as a teenager or through College/University.
These situations can all affect how we perceive and value money, thus how we “treat” money.
Step 1: Educate Yourself
Before taking any action, it’s important to ensure you are well-equipped with the knowledge needed to make positive change to your finances. Good intentions are no help if you don’t know where to point them!
I can’t stress enough how important this step is. Obviously, you should never expect to know everything, and education takes time; but that’s okay! But you need to start today. Not tomorrow, not on Monday, and definitely not in the New Year!
While this is “step one”, you’ll continue to learn and grow constantly, so get a good grasp of the fundamentals and continue to learn alongside steps 2-5.
In today’s world, there are many ways to get information. We’re all different, and we all like different styles. For example, you may prefer one or more of: reading books, listening to podcasts, following personal finance blogs/social media pages, or even taking a free personal finance course.
The choice is yours! To help you find a starting point, I’ve listed some of my favourite books, podcasts, and brands/accounts that have helped me become more knowledgeable over the years. Hopefully, at least one will provide a style that you enjoy.
Books
Some of these are free via Amazon Prime, or via a free Audible trial if you prefer to listen. While a couple of these books are US based, the lessons they teach are universal!
- “Money: A User’s Guide” – Laura Whateley
- “The Total Money Makeover” – Dave Ramsey
- “Money Lessons” – Lisa Conway-Hughes
- “I Will Teach You to Be Rich” – Ramit Sethi
- “Rich Dad, Poor Dad” – Robert T. Kiyosaki
- “The Psychology of Money” – Morgan Housel
Podcasts & YouTube
Here are some of my favourite podcasts and YouTube channels. There are so many more than what I’ve listed here, but I’ve stopped at eight examples!
- The Martin Lewis Podcast – BBC Sounds, Spotify, Apple Podcasts, and more
- This is Money – Website, Spotify, Apple Podcasts, Audioboom and more
- Making Money Podcast – YouTube
- Damien Talks Money – YouTube
- Stocks & Savings – Spotify, Apple Podcasts, Amazon
- Money Box – BBC Website, Spotify, Apple Podcasts
- Money Clinic With Claer Barrett – Spotify, Apple Podcasts, Stitcher, Acast
- Girls That Invest – Website, Spotify
Social Media Pages & Blogs
Here are some of my favourite social media accounts and blogs:
- Money Saving Expert (Website) – It’s probably no surprise that I’d include Martin Lewis’ MSE first in this list. An absolute treasure trove of information, whatever you’re looking to learn.
- Skint Dad (Website) – A great everyday money blog, especially for those looking for something with a more casual tone.
- Stocksandsavings (Instagram) – The minds behind the Stocks & Savings podcast, Andreea and Jamie are a great page to follow for those starting on their investing journey. Genuinely relatable, real people, and both are Chartered Accountants; so they know their stuff!
- Foundered (Website, YouTube, Instagram, TikTok) – I’ve spoken to the owner of Foundered (Connor) many times, and he’s a fountain of knowledge. He can back up his words, too, as someone who’s retired at just 40 years old!
- Tom Talks Money (X/Twitter) – As with Connor above, I’ve spoken to Tom a lot. His page is somewhere between a “financial education” and “motivational” brand. If you’re looking for a daily dose of no-BS truths around money, investing and working hard, then this is a good place to go.
FREE Courses
Last, but by no means list, here are a couple of free courses you can take. I’ve personally taken a look at MSE’s Academy of Money, and I think it’s a fantastic place to start. I didn’t even know it existed until recently!
- MSE’s Academy of Money – Open University (great for all adults; builds a solid foundation)
- Managing My Money For Young Adults – Open University (great for 16-18 year olds)
Step 2: Self Reflection
Once you have a basic understanding of how you can manage your money, the next step to change your money mindset is to apply that knowledge to your own situation. Everyone is different, after all, which is why we call it personal finance.
To do that, we first need to look in the mirror and reflect and question our feelings, attitude and behaviour around money.
You could start this process by asking yourself these questions:
- “What did I hear and see about money growing up? What do I think about these now?”
- “What’s one thing my parents did with their money that I want to do the same?”
- “What’s one thing my parents did with their money that I want to do differently?“
- “What are my emotional money triggers? How can I reduce their frequency?“
- “Why do I want to build wealth? What are my financial goals?”
- “What changes do I need to make?”
TIP: Be sure to write down your answers (either on paper or on a computer), as this will help you really focus on your thoughts and feelings.
For some, creating a “money journal” can be more helpful. Rather than answering these questions in one sitting, you would instead write down your thoughts and feelings as individual financial situations occur. This way, you are able to better pinpoint your spending triggers, while becoming more aware of your habits and behaviours.
Step 3: Visualise Your Perfect Retirement
Feeling unmotivated to push on and succeed? Struggling to find your “why?”? Perhaps you couldn’t answer the question in step two, relating to financial goals?
Then try this activity instead.
Sit down for 10 minutes each day, and visualise your ideal – or dream – retirement.
Really think about it, in as much detail as you can manage. Eventually, you will be able to picture it on command, and it’ll consistently look roughly the same. This is the life you’re working for, and it’ll be worth it.
To truly change your money mindset, you need to know your why.
Ask yourself:
- “How old will I be?”
- “What does my perfect house look like? How many rooms does it have? What furniture is in each room? What does the kitchen look like? What does the garden look like?”
- “What pets, if any, do I have?”
- “Who am I living with? What are they like?”
- “What hobbies will I do? Where will I travel to?”
Write down your thoughts on paper (or computer) and read it every time you feel like things are tough. The clearer this dream becomes, the more motivated you will become to achieve it.
Step 4: Believe In Yourself
To change your money mindset, you may find you need to change your overall mindset; the very way you think. Doing so is often much harder than people realise. Any habit, whether physical or mental, can be tough to undo.
Many of us have conditioned ourselves into criticising everything we do; we tell ourselves we’re going to fail, it’s going to be too hard, it’s too difficult, and so on. We force ourselves into a subconscious negative feedback loop.
Try to pick up on when you’re thinking negatively. Alternatively, ask a loved one to help you out in identifying these moments. Instead, force yourself to think (loudly, in your head) that same thought in a different way.
- Instead of “I’m probably going to fail”, think “I’m going to give this everything I’ve got; if I fail, at least I did everything I could”.
- Instead of “I don’t have the time”, think “How can I prioritise differently so that I DO have the time?”
- Instead of “I’m bad with money”, ask yourself “How can I get better at managing money?”
- Instead of “I need a coffee”, think “I’m allowing and choosing to have this coffee”.
Over time, these self-affirmations will allow you to become more confident. It will – more likely than not – have a noticeable, positive impact on your mental health and willingness to try new things.
Step 5: Take Action
Once you’ve become comfortable with steps one to four, you’re ready to take action. You have the building blocks to change your money mindset, but thoughts are only half of the equation. You also need to act on what you’ve learned.
You’re now armed with:
- Better (and continually improving) financial literacy.
- An understanding of how you view money, and where some of your financial habits – good or bad – have come from.
- A detailed mental image of what your perfect retirement looks like.
- A healthier attitude towards yourself and your ability to succeed.
Which means you can now put all of these things together and begin to make real, tangible changes to your life.
You have the tools to build long-term wealth and make that dream retirement a reality.
Looking for a place to start? Read about the importance of an emergency fund.
Remember:
You don’t need to tackle everything all at once!
Set small, achievable goals with defined – and realistic – timeframes/deadlines. Then, write down the actions you must take to achieve each goal. It’s generally recommended setting no more than three to five goals at a time, to prevent overwhelm.
That’s it for this five-step process on how to change your money mindset!
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